How To Check Your Mortgage Offset Interest For Hidden Bank Errors!

A mortgage offset account is one of the easiest ways to pay off extra on your mortgage.

The more in your offset, the longer you leave it there, the more you save, providing the bank does the correct calculations and reduces the amount of interest you pay on your loan.

But what if the bank gets it wrong, and you get no benefit?

ASIC recently reviewed eight of Australia's biggest banks and found they paid more than $55 million in compensation to customers in just two years for offset account failures.

The scary part?

Most customers had no idea anything was wrong.

Here is the uncomfortable truth about your mortgage.

You let the bank tell you how much to repay and how often. You let them calculate your interest charges. And you trust your offset is working because nobody has told you otherwise.

But ASIC found that banks had failed to identify 77 per cent of offset failures before the regulator started asking questions. And in some cases the failures went undetected for years, even by the banks themselves.

Your repayments stay exactly the same whether your offset is working or not. No error message. No warning. Just quietly paying more interest than you should.

The most common failures ASIC identified were offsets linked to the wrong loan, offsets that fell off when a loan was split between fixed and variable, and offsets de-linked when a borrower refinanced, with no notification to the customer.

One Brisbane homeowner spent two years depositing savings into what she believed was offsetting her mortgage. It was only when she went to refinance that she discovered it had never been properly linked. The bank offered more than $5,000 in compensation. But as she said - "Why would I trust the bank at that point?"

Another victim of the banks was Lyndsey, from WA, and she would have lost over $20,000 if she hadn't found the problem early.

The bank had set up her offset correctly, the bank had set up the loan correctly, she was even paying a fee for the offset, but the offset was not linked to the loan. So she was receiving no benefit.

"I was getting the feeling something wasn't quite right and I couldn't put my finger on it. It could have ended up costing me $20,000" Lyndsey K, WA, Australia - Home Money Manager Testimonial

Luckily, she was using HomeMoneyManager's mortgage checking tool to manage her mortgage and noticed the interest errors showing up. After she reported it to her mortgage broker and the bank, they fixed it, but neither of them had any idea there was an error.

The great thing with HomeMoneyManager's mortgage and budget app, MoneyFormula, is it makes it very simple for Australian homeowners to check their mortgage and offset accounts for errors.

And with over 20 years of experience helping Australian homeowners independently audit their home loan interest, track offset accounts, and calculate bank error refunds, MoneyFormula is not only great for your budget and spending reviews, it is the go to tool in Australia for mortgage checking.

But before we look at how MoneyFormula handles this, let's take a quick look at what the manual calculation actually involves.

To check your offset manually you will need to pull out a spreadsheet and track the daily balance of your mortgage and your offset account.

Work out your daily interest rate and then calculate the loan interest and the offset saving amount, and subtract one from the other.

Add up all the daily interest amounts and work out your total for the month and compare it to what the bank charged you.

You also need to take into account any package or wealth discounts being applied, and if your offset is 100% deductible, if there needs to be a minimum balance, and that the same interest rates are applied to both.

If you are using MoneyFormula, simply set up your loan, set up your offset account, link the two and run the Interest Calculation Checker. It will instantly calculate everything for you and compare it to the bank's charges and point out any differences.

You can also run the MoneyFormula Daily Interest report that gives you a complete breakdown of all the calculations in case you need to chase up your bank.

If you have multiple offsets, things get more complex if you are calculating interest manually.

You need to keep a running balance and interest on each offset and deduct them all from the loan.

This is exactly where banks make mistakes, and manually checking multiple offsets against a loan is genuinely difficult.

Luckily with the MoneyFormula app you just enter your other offset accounts, link them all to the same loan and the Interest Checker report and Daily Interest report do all the interest calculations automatically

You know exactly what interest you should be paying and as a bonus you will see how much your offsets are saving you.

Do not just take their word for it. MoneyFormula's Refund Calculator lets you independently verify any compensation figure the bank puts in front of you. If the numbers do not match, push back and ask for a full explanation.

The refund calculator works out when the error happened and the compound interest on the error. So if it happened a couple of years ago, the bank has been charging you interest on the error. Ouch!

The refund calculator takes each error, and automatically calculates the total refund on each.

Always start by contacting the bank and telling them you think there is an error in your mortgage and ask them their process. Some will run some calculations, others might want some evidence.

If the bank can't find the error and you are not satisfied with their explanation, you have the option to escalate to the Australian Financial Complaints Authority (AFCA). It is free, independent, and the banks have to respond.

ASIC is also continuing to monitor the situation and consider further regulatory action.

While ASIC is currently highlighting the latest findings, bank overcharging and bank interest errors have been going on for the past 20 years.

HomeMoneyManager has been helping Australians find bank errors and manage their mortgages since early 2000s, and the MoneyFormula app is their latest mortgage checker app that will help you.

The following testimonials from Australian bank customers, tell the story over that time:

"Bank's errors are now known to add up to hundreds of millions of dollars every year. Now there is help, a computer program that can check your monthly statements and find the mistakes." - Today Tonight Featuring HomeMoneyManagers mortgage checker

"I have been using Home Money Manager's mortgage checker since 2013 and have been very happy with the functionality and support of the product. The ability to independantly validate and verify the banking home loan interest calculation using this product is worth the purchase price, as a miscalculation on the banking system can end up costing thousands over the life of the loan. - 5* Google Review - Nathan Hines, Australia

"I saw the segment on Today Tonight this week in relation to your product for Home Money Manager mortgage checker. Thank you for a brilliant programme - I have had issues with a bank before and think that a programme like yours is necessary." - Lynn L, Buderim, QLD, Australia - Home Money Manager Testimonial

"I will not hesitate in recommending not only your excellent mortgage software package but the high level of customer service you've shown me to whoever I meet that needs a mortgage program that Home Money Manager could help with..." - Ron G, Rowville, Australia - Home Money Manager Testimonial

"I showed my husband last night and he was impressed with what the program did. Also the inputting of my last 2 statements was very simple. Even my daughter was surprised I had worked it out so quickly. But I did go through the entire tutorial. So as far as the software is concerned, it is very user friendly." - Sonja S, Victoria, Australia - Home Money Manager Testimonial

"I have purchased and am using your program to audit my home loan. It found that my lender had overcharged me and they have since corrected this. (Thanks!). The lender did take a while to investigate it fully, however they did explain how all their calculations worked and were very nice and professional throughout the process. P.S. Your program is brilliant! Very easy to use and understand." - Quoc T, Croydon, Australia - Home Money Manager Testimonial

"I feel that anyone with a mortgage should be using this software." - Phillip W, North Lakes, QLD - Home Money Manager Testimonial

"I have been using Home Money Manager mortgage checker for a very long time. I was always wondering if the banks were charging too much interest and this program is perfect to keep them honest. There are many other benefits when using this program and I highly recommend this to anyone." - 5* Google Review - Darren Gwynne, Australia

"I checked out all the figures again. The errors that happen from 2011 onwards are because when the building society added my 'lost' payments they did not make any attempt to correct the interest. Payments and lost interest makes a total difference of $778.04. I now feel confident to approach the building society and request that they amend it. Once again, Thank You Very Much :-)" - Michelle G, WA, Australia - Home Money Manager Testimonial

"I have been a user of the Home Money Manager software now for over 7 years, and absolutely love the program! Prior to installing this program, I had looked at a variety of other options, but none met my needs like this one did. It's simple to set up, easy to use and super reliable. Alongside this, the customer service is awesome - it's responsive and personal and is a great match for a great software product. Highly recommended. This is genuinely how I feel about the product and your service ... " - Angela P, Queensland - Home Money Manager Testimonial

"I find the mortgage software to be excellent and will continue to use it and would be happy to recommend it to family and friends." - Barry K, Adelaide, Australia - Home Money Manager Testimonial

"Great interest checker program. Very pleased with it - particularly the Auto-Matching / Learning feature, it's a real time saver. I installed the software and trialled it quite satisfactorily without reading the manual, which I find a good preliminary test." - Richard J, Rose Park, Australia - Home Money Manager Testimonial

MoneyFormula's Mortgage Tracker includes the Interest Calculation Checker, Daily Interest report, Offset Benefits report and Refund Calculator, everything you need to check your offset is working and verify any numbers your bank gives you.

Think of it as a quick audit of your offset account. It only takes a few minutes to see if you are due a bank offset account error compensation.

The great thing is, by using the Open Banking bank sync option, you can load the latest loan and offset details in seconds and check the calculations. If there is a mistake you can go back as far as you need and import older information to calculate the true error.

For more information refer to Roadmap to Success Video 5 - Mortgage Insider Secrets in the MoneyFormula app. Learn how to check your mortgage for hidden bank errors and discover the insider secrets the banks don't want you to know about your biggest debt.

You can also follow MoneyFormula's four simple steps to help you budget, review your spending, pay down debt and set goals. Along with mortgage checking it is the ideal tool for the Australian homeowner.

Give MoneyFormula a go and check your offset today!